Cross-posted from Paul Craig Roberts
The negative growth rate of -2.9 percent is itself an understatement. This number was achieved by deflating nominal GDP with an understated measure of inflation. During the Clinton regime, the Boskin Commission rigged the inflation measure in order to cheat Social Security recipients out of their cost-of-living adjustments. Anyone who purchases food, fuel, or anything knows that inflation is much higher than the officially reported number.
It is possible that the drop in first quarter real GDP is three times the official number.
Regardless, the difference is large between the January forecast of +2.6 percent growth and the decline as of the end of March of -2.9 percent.
Any economist who is real and unpaid by Wall Street, the government, or the Establishment knew that the +2.6 percent forecast was a crock. Americans' incomes have not grown except for the one percent, and the only credit growth is in student loans, as those many who cannot find jobs mistakenly turn to "education is the answer." In an economy based on consumer demand, the absence of income and credit growth means no economic growth.
The US economy cannot grow because corporations pushed by Wall Street have moved the US economy offshore. US manufactured products are made offshore. Look at the labels on your clothes, your shoes, your eating and cooking utensils, your computers, whatever. US professional jobs such as software engineering have been moved offshore. An economy with an offshored economy is not an economy. All of this happened in full view, while well-paid free market shills declared that Americans were benefiting from giving America's middle class jobs to China and India.
I have been exposing these lies for a decade or two, which is why I am no longer invited to speak at American universities or to American economic associations. Economists love the money that they receive for lying. A truth-teller is the last thing that they want in their midst.
An official decline of -2.9 percent in the first quarter implies a second quarter GDP decline. Two declines in a row is the definition of recession.
Imagine the consequences of a recession. It means that years of unprecedented Quantitative Easing failed to revive the economy. It means that years of Keynesian fiscal deficits failed to revive the economy. Neither fiscal nor monetary policy worked. What then can revive the economy?
Nothing except to force the return of the economy that the anti-American corporations moved offshore.
This would require credible government. Unfortunately, the US government has been losing credibility since the second term of the Clinton regime. It has none left.
Today no one anywhere in the world believes the US government except the brain dead Americans who read and listen to the "mainstream media." Washington's propaganda dominates the minds of Americans, but produces laughter and scorn everywhere else.
The poor US economic outlook has brought America's two largest business lobbies -- the US Chamber of Commerce and the National Association of Manufacturers (or what is left of them) into conflict with the Obama regime's threat of further sanctions against Russia.
According to Bloomberg News, beginning tomorrow (June 26), the business groups will run advertisements in the New York Times, Wall Street Journal, and Washington Post opposing any further sanctions on Russia. The US business organizations say that the sanctions will harm their profits and result in layoffs of American workers.
Thus, America's two largest business organizations, important sources of political campaign contributions, have finally added their voice to the voices of German, French, and Italian business.
Everyone, except the brainwashed American public, knows that the "crisis in Ukraine" is entirely the work of Washington. European and American businesses are asking: "why should our profits and our workers take hits in behalf of Washington's propaganda against Russia?"